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-- this post authored by Felix Richter with added note by Econintersect.

Tesla announced a new funding round in an attempt to strengthen its balance sheet and reduce the risks associated with the massive investments necessary ahead of the Model 3 production launch.

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As our chart illustrates, Tesla plans to invest $2.0 to $2.5 billion in capital expenditures, i.e. property and equipment purchases, in the first half of 2017 alone, potentially doubling last year’s cap ex spending before the Model 3’s planned production start in July.

While Tesla did hold $3.4 billion in cash and cash equivalents at the end of 2016, a little financial cushion won’t hurt considering the challenging Model 3 launch ahead and the company’s chronically negative cash flows from operating and investing activities.

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